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Back to the Future

Terrorist attacks are becoming more abominable at every occurrence; people are shooting cops in the US; post-war Europe is breaking up; and now there's a coup – or possibly a fake one – in one of the world's most strategically important countries, Turkey.

There are complex reasons for all of these events. Reducing it down to a single 'thing' is fraught with danger. But I'll have a go anyway...

It seems to me that the world is reacting to a kind of economic headlock, produced by distorted monetary policy and overwhelming bureaucracy by the 'elite' – both elected and unelected policymakers trying to 'central plan' the world into their own vision.

This type of stealth dictatorship is a force that is eventually met by an equal and opposite force. You're seeing that manifest in the form of hatred all around the world.

Don't get me wrong, I'm not trying to justify or excuse the hatred that is bubbling all around. I'm just trying to make sense of it.

At a slightly saner level, the response you're seeing to this economic upheaval is the rise of political populists like Donald Trump. His rise is in direct response to the ongoing stagnation of the US economy. Don't be fooled by the S&P 500 breaking out to all-time highs. That is a symptom of financial repression, not of prosperity.

The 'people' aren't enjoying the uplift in wealth that the stock market brings. Instead they have to deal with stagnant wages and job insecurity. Trump provides an outlet for their fears, hence his popularity.

He also provides an alternative to the perceived corruption of the Clinton's, who are representative of the global 'elite'. The irony is rich for the US here...

The country was founded on the rejection of both the monarchy and hereditary rights (and the ability of these rights to tax from afar). Yet in the past few decades, you've seen Bush senior and junior rise to the rank of 'commander in chief'. Now, there is the prospect of another family dynasty rising to the top again...the 'Clintons', perhaps the most insidious power family in US history. And that's saying something.

While there are no good choices for the US in the upcoming election, maybe this is why Trump doesn't seem so bad. Not to me, anyway. Or maybe it's my fondness for the Back to the Future trilogy, and the way Trump reminds me of Biff Tannen in the alternate reality of Part II of the series.

You remember how it goes...future Biff travelled back in time and gave his younger self a sports almanac with 50 years of sporting results. Young Biff used this information to punt his way to wealth and power. This led to a very disturbing future, the centrepiece of which was a massive casino (a bit like today's stock market).

Now, the 'alternate, powerful' Biff looks disturbingly like Trump...but I'm getting off the point here. Because when the potential leader of the most powerful nation on Earth resembles a caricature, it's time to take stock.

We have megalomaniacs centrally planning their way around the world. This is stunting economic growth, while ensuring the upper levels of society get a greater share of this shrinking wealth. In response, you're seeing a tidal wave of ignorance and hate – in the form of terrorism – lash out against this.

Is it any wonder that the price of gold is on the rise? As we head into a US election, gold is simply a must own asset. If you're yet to bolster your portfolio with bullion or gold stocks, don't worry, it's not too late.

Gold is in the process of correcting lower after experiencing a very strong run. I wouldn't be surprised to see it fall back to around US$1300 an ounce – or lower. The correction continued in Friday's US trading session, but news of the coup in Turkey saw it jump higher again late in the day.

With the alleged coup now under control, gold is under pressure again across Asian markets this morning. As I write, it's trading around US$1330 an ounce.

In my view, this correction is a buying opportunity. Whether it will play out for just a few weeks, or over a few months, I don't know. But I do know that all rising markets need to pause for breath from time to time, and gold is no different.

So use this period to your benefit. If you've been thinking about adding some gold stocks to your portfolio, now is the time to act.

Greg Canavan is editor and publisher of Sound Money, Sound Investments, a weekly financial report devoted to unearthing great value investments amid today's "money illusion" of fiat currency. Formerly editor of Australia's market-leading finance newsletter, Greg has been a regular guest on CNBC, ABC and BoardRoomRadio, as well as a contributor to publications as diverse as LewRockwell.com and the Sydney Morning Herald.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.